The Australian Dollar is trading sharply lower on Tuesday, erasing all of yesterday’s short-lived gains that were generated by Saturday’s surprise election results. Dovish Reserve Bank monetary policy meeting minutes and comments from the central bank chief ignited the renewed selling pressure.
The minutes of the RBA’s May 7 monetary policy meeting said a rate cut would be appropriate if the labor market shows no further improvement.
Meanwhile, RBA Governor Philip Lowe further pressured prices after he said he’ll consider cutting interest rates at next month’s meeting to spur faster hiring, saying that the jobless rate needs to move below 5% to help drive inflation back to its target.
At 06:02 GMT, the AUD/USD is trading .6877, down 0.0030 or -0.43%.
Daily Technical Analysis
The main trend is down according to the daily swing chart. A trade through .6864 will signal a resumption of the downtrend. The next major target is the January 3 main bottom at .6764.
The AUD/USD is in no position to change the main trend to up so we’ll have to wait for a closing price reversal bottom to generate a counter-trend rally.
The minor trend is also down. A trade through .6935 will change the minor trend to up. This will also shift momentum to the upside.
The major retracement zone resistance is .6967 to .7030.
Daily Technical Forecast
Based on the early price action, the direction of the AUD/USD the rest of the session is likely to be determined by trader reaction to the long-term uptrending Gann angle at .6886.
A sustained move under .6886 will indicate the presence of sellers. This could trigger a further break into the minor bottom at .6864. Taking out this level could trigger an acceleration into the next uptrending Gann angle at .6825. This is the last potential support angle before the .6764 main bottom.
Overcoming and sustaining a move over .6886 will signal the return of buyers. If strong buying volume is able to generate enough upside momentum then look for the rally to possibly extend into the minor top at .6935, followed by a resistance cluster at .6966 to .6967.
This article was originally posted on FX Empire
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